Alphabet Sees AI Surge Drive Strong Q3 Earnings Growth

Following Alphabet’s impressive third-quarter earnings report that exceeded analyst expectations, CEO Sundar Pichai and other executives informed investors of substantial gains fueled by increased demand for artificial intelligence (AI). This optimistic outlook boosted Alphabet’s shares by over 5% in after-hours trading on Tuesday.

Pichai noted that Alphabet’s substantial investments in AI were yielding significant benefits, with AI demand spurring growth across Google’s search and cloud divisions. Google Cloud posted an impressive 35% year-over-year revenue increase, reaching $11.4 billion in the third quarter, bolstered by its AI infrastructure, generative AI solutions, and other key cloud products.

He also conveyed that Alphabet is well-positioned to lead in the evolving AI landscape, anticipating rapid innovation and progress in AI-driven products. Pichai highlighted a rise in Google Search usage among those engaging with its AI-enhanced overviews and noted that Google Lens now facilitates 20 billion visual searches each month.

Chief Business Officer Philipp Schindler shared that Alphabet’s new AI-powered features have enhanced search experiences, receiving particularly positive feedback from younger users. CFO Anat Ashkenazi, appointed in July, suggested that the company’s AI advancements are likely to yield revenue growth in the near future.

Alphabet’s capital expenditures reached $13 billion for the quarter, with Ashkenazi indicating a similar investment in the fourth quarter and an anticipated increase in 2025 as Alphabet ramps up its AI spending. She emphasized that these investments are aligned with growing customer demand for AI capabilities.

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